COMPANY NEWS

COMPANY NEWS; RESTATEMENT BY PRE-PAID LEGAL REDUCES EARNINGS

Published: August 1, 2001

Pre-Paid Legal Services Inc. restated financial statements for the last two years, wiping out more than half its profit, after the Securities and Exchange Commission said the provider of legal insurance improperly recorded some commissions paid as assets. The S.E.C. said in May that Pre-Paid incorrectly classified advance payments to salesmen as an asset, instead of as an expense, as required by accepted accounting principles. Pre-Paid appealed the ruling. It was the third time since 1986 that the S.E.C. demanded the company restate earnings. The restatement reduced 2000 earnings to 81 cents from the $1.92 it had reported at the end of April. Earnings for 1999 were cut to 57 cents from $1.67.